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Ellmore makes a st rategic alliance

8 September, 2005By Steve Menary

Since taking over his father's company three years ago, Steve Ellmore has restructured the firm and is focusing on growing the smaller subsidiaries. He talks alliances and bespoke joinery with Steve Menary

THERE is strength in numbers according to the old wisdom and an increasing number of small to medium-sized regional contractors are taking it to heart.

As major contractors threaten to turf them out of their traditional market through partnering and framework deals, SMEs are banding together to form alliances to provide national coverage for their clients.

Like many of its regional peers, Leeds-based Ellmore has suffered from the shift in market forces but Steve Ellmore, a youthful 38, is not about to allow the business his father founded 33 years ago to go down the pan.

Instead of griping, Mr Ellmore went looking for a solution ? and for allies.

'We'd had calls from firms from outside our area saying their clients wanted to work in different parts of the country if we had an off ice there, ' he says.

Ellmore will probably only turn over around £12.5 m illion in the year ending November 2005 but the f irm's managing director does not want to grow outside of their native patch. Mr Ellmore saw disaster lying down that route so used his membership of the Federat ion of Master Builders to begin discussions with a number of other similarly-sized contractors, a move that has led to the setting up of a loose strategic alliance of five firms.

Based at Yeadon in Leeds, Ellmore represents Yorkshire. Ronald Thompson covers the north-east, Speakmans operates out of Manchester, Baggaley works out of Mansfield and Nicholls & Wilson hail f rom Milton Keynes.

Speakmans already has a similar agreement with a number of other contractors that enables the firm to provide coverage for clients in Cumbria and Wales, so the idea has provenance.

So far, Ellmore has yet to push any work through the alliance, which is only just being formalised and only covers maintenance but Mr Ellmore is confident that the idea can work.

He says: 'We work nationwide for other banks like Abbey and Lloyds TSB.

All that work is controlled through Leeds and we send the guys away and lodge them. The banks and building societies prefer to use people they know and pay to put them up.

'This agreement is about sharing ideas and using each others offices. It could be that one of those other four contractors wins a nice juicy contract and we get the work in Yorkshire. Or we might win a big job and give a section to another firm.' The idea sounds rather like subcontracting work out but Mr Ellmore insists it is more a reaction to national contractors trying to get firms like his to act as subbies.

He says: 'We don't want to work as a subcontractor. There's enough f lack f lying around in construction as it is and then you also start getting the problems with payment. You have to do this k ind of thing to make yourself big enough to be heard over the big contractors.' Ellmore has its own framework agreements for smaller works such as a deal with Peveril, the company which manages many new retirement buildings for house builders such as McCarthy & Stone. Mr Ellmore points to his firm's ability to offer key services such as a joinery shop or stone masons for their restoration activities as a reason why firms like Ellmore will survive.

Since taking over three years ago, Mr Ellmore has grown the business and pushed through a restructuring.

He has secured the British Standards ISO 9001:2000 mark for quality management and the next stop is Investors in People status. He restructured the firm into five divisions covering construction;

bank and shop-fitting;

facilities management, bespoke joinery;

and restoration and conservation.

'We always did all this but it was a jumble and some clients did not realise that we did all these different things, ' he explains. 'It was as much a marketing tool and it has worked.' Construction and fit-out are the most buoyant parts of the business but Mr Ellmore's focus has been on the smaller subsidiaries, such as maintenance and joinery.

He splashed out £330,000 on building a new factory for the joinery business, which has so far served the construction and shop-fitting operations but is looking for outside customers.

With only a quarter of the new f loor space being used and just 10 joiners on the payroll, Mr Ellmore wants to offer these services to other construction firms such as house builders.

As par t of this d r ive, he bought the client list and a veneering machine and the client list from a one-man Leeds-based firm, LM Wright, whose owner was retiring due to ill health.

His team can produce bespoke items such as a 25 m triple-glazed wooden conservatory for Yorkshire Water's headquarters and these are being marketed along with machinery like the veneering kit.

Ellmore also pushes staff through apprenticeships with two brickies, seven joiners and two surveyors being trained at present and another member of staff doing a part-time degree at Leeds Met University.

This is what will not only sustain the company but also, Mr Ellmore hopes, win round more and more clients so that firms like his can start to turn the tide.